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When watching the real estate market we all are projectors. When I grew up in New York, real estate was this volatile thing where peoples homes were worth hugely different amounts over the years. Now that I live in Atlanta, the property values are boring but I know I will get  my 4–7 percent appreciation year after year.

Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, has  developed a simple but elegant analysis of the 3 main types of real estate  markets we see in the country. They are  the  Linear Market, the Cyclical Market, and the Hybrid Market.

• Linear markets, where booms and busts virtually never occur. Prices plod along, gaining modestly. Local changes in economic growth may nudge prices up or down, but the moves rarely are dramatic. Much of the middle American heartland fits in this category. Examples include Columbus, Indianapolis, Houston, San Antonio, Memphis, Atlanta, Cincinnati, Des Moines and Louisville.

• Cyclic markets. These are the shooting stars of housing booms, and generally they are located along the East and West coasts, where household incomes are higher and land for new construction is in short supply. They include most of California from the San Francisco Bay area south, much of Florida, metropolitan Washington, D.C., and Baltimore, New York and much of New England. When conditions are ripe — as they have been recently — annual housing gains in these areas can exceed 20 percent to 30 percent at the cyclical peak.

Typically, however, the local booms burn themselves out by pushing prices to unaffordable levels. Some cyclic markets experience jolting corrections that knock prices down by 15 percent to 25 percent, as occurred in Southern California in the early 1990s following a multiyear boom.

• Hybrid markets. These are areas that have linear, slow-growth characteristics for periods, followed by periods of moderate cyclic-style appreciation. They never boom quite like Florida or California, but they also never need to correct like the more volatile markets either. Cagan includes Chicago, Seattle, Minneapolis-St. Paul, Detroit and Phoenix in this category. via the MiamiHerald.com

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